Correlation Between Global Net and Avis Budget

Can any of the company-specific risk be diversified away by investing in both Global Net and Avis Budget at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global Net and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Net Lease and Avis Budget Group, you can compare the effects of market volatilities on Global Net and Avis Budget and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global Net with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Avis Budget.

Diversification Opportunities for Global Net and Avis Budget

0.61

Correlation Coefficient

Global Net  Avis Budget

Poor diversification

The 3 months correlation between Global and Avis is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group and Global Net is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global Net Lease are associated (or correlated) with Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of Global Net i.e., Global Net and Avis Budget go up and down completely randomly.

Pair Corralation between Global Net and Avis Budget

Assuming the 90 days trading horizon Global Net is expected to generate 10.82 times less return on investment than Avis Budget. But when comparing it to its historical volatility, Global Net Lease is 5.77 times less risky than Avis Budget. It trades about 0.12 of its potential returns per unit of risk. Avis Budget Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  9,729  in Avis Budget Group on May 6, 2025 and sell it today you would earn a total of  6,678  from holding Avis Budget Group or generate 68.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Global Net Lease  vs.  Avis Budget Group

Global Net Lease

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Avis Budget Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avis Budget Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Avis Budget reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Net and Avis Budget

The main advantage of trading using opposite Global Net and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Avis Budget can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Avis Budget will offset losses from the drop in Avis Budget's long position.

The idea behind Global Net Lease and Avis Budget Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.